Heat Pump Running Costs: Are They Really Cheaper?

The Core Question

Air source heat pumps are extraordinarily efficient — delivering 3–4 units of heat for every 1 unit of electricity. But electricity currently costs around 4x more than gas per kWh. Does the efficiency advantage outweigh the fuel cost difference?

The Maths

Gas costs approximately 7p/kWh. A 90% efficient gas boiler delivers 0.9 kWh of heat per 1 kWh of gas, at an effective cost of about 7.8p/kWh of useful heat.

Electricity costs approximately 28p/kWh. A heat pump with a COP of 3.5 delivers 3.5 kWh of heat per 1 kWh of electricity, at an effective cost of 8p/kWh of useful heat.

At these figures, the running costs are broadly comparable. But the comparison shifts significantly with:

**Higher COP systems:** A heat pump achieving COP 4 delivers heat at 7p/kWh — cheaper than gas

**Time-of-use tariffs:** Octopus Energy and similar providers offer reduced overnight electricity rates (as low as 7p/kWh), dramatically improving the economics

**Better-insulated homes:** Less heat demand means the pump runs more efficiently

Real-World Comparison

A well-specified heat pump in a well-insulated home on a smart electricity tariff will typically have annual running costs 20–40% lower than a gas boiler. A poorly specified pump in a draughty home on a standard tariff may cost more to run than gas.

Factors That Improve Heat Pump Economics

Underfloor heating (allows lower flow temperatures and higher COP)

Larger radiators (same benefit)

Good insulation (lower heat demand)

Smart electricity tariffs

Running the heat pump continuously at lower temperatures rather than cycling

What About Carbon?

Even at current grid carbon intensity, heat pumps produce fewer carbon emissions than gas boilers. As the grid becomes greener, this advantage grows.

Our Honest Assessment

Halo Heating will model the running costs for your specific home before recommending a heat pump. We believe in honesty, not sales. Call 01483 676108 for a free heat pump consultation.